ORGANIZATION. Date Session Content. 5/3/ Competitive positioning and branding strategies

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1 ORGANIZATION Date Session Content 5/3/ Competitive positioning and branding strategies 6/3/ /3/ Brand specific activities and buying behavior (The Henkel example) Corporate communication / advertising (The Red Bull example) 21/3/ Exam Weight Activity 30% Participation/Attendance 30% Practical cases 40% Multiple Choice Exam 20 March Seminar Strategic Marketing 1

2 Universidad de Córdoba Facultad de Ciencias y Empresariales (ETEA) CASE STUDY 3: CORPORATE COMMUNICATION / ADVERTISING (THE RED BULL EXAMPLE) Johannes Stolz (jstolz@uloyola.es) 20 March Seminar Strategic Marketing 2

3 RED BULL Founded in 1984 by Dietrich Mateschitz after discovering the widespread popularity of tonic drinks in the Far East. Development of the Red Bull Energy Drink, launching the product on the Austrian market in 1987 First introduced in Thailand under brand called Krating Daeng (eng: Red Bull) Today: World s best-selling energy drink Product range: Red Bull Cola, Red Bull Energy Shots Sales 2011: > 4.6 billion cans in 160 countries. > employees 20 March Seminar Strategic Marketing 3

4 THE MARKETING MIX To meet the needs of its customers, every organization seeks a distinctive marketing mix / 4Ps (McCarthy, 1960). Product the specific features and benefits of the product Place where and how the product is sold Price setting the right price in each market Promotion using the most suitable form of promotion to reach customers. The Red Bull Energy Drink Distinctive product - the taste of the product is unlike any other, it also has a functional effect in comparison to other soft drinks Sold in a variety of places including retail outlets and food and drink establishments Premium pricing strategy. The product is priced above that of competitors products. Consumers will pay a premium for Red Bull due to the quality of the product and the product s benefits. Promotion using the most suitable form of promotion to reach customers. 20 March Seminar Strategic Marketing 4

5 COMMUNICATION PROBLEM AND SOLUTION Problem In today s society, consumers are bombarded with promotional messages Reception through radio, television, newspaper, commute to work or simply walk around a city centre. Many messages make it difficult for a business to reach its target audience. Effective promotion relies on the message reaching the consumer in an accurate and timely way. Promotional messages crowd the marketplace and make everything more confusing for consumers. Creation of a marketing problem Solution Marketers look for new ways to communicate with consumers. Breaking of traditional marketing by reaching consumers in innovative ways Digital and Social Media, Word of Mouth (WOM) 20 March Seminar Strategic Marketing 5

6 PROMOTIONAL APPROACHES (1) Aim of promotion: Growth of the business and increasing market share Development of a promotional strategy in order to increase sales Strategy is often based on AIDA principles (stages in a sales process) Red Bull bases promotion on events, creating awareness and interest for their products A I D A Awareness Then stimulate interest This creates a desire for the product Action occurs when the customer purchases the product 20 March Seminar Strategic Marketing 6

7 PROMOTIONAL APPROACHES (2) Above-the-line (ATL) Key element: Advertising Usually delivers messages to a wide audience using the press, television, cinema, radio and the internet. Easy to reach a large audience but impersonal to customers Difficult to deliver a memorable message that is tailored to a specific target market. High costs: Television adverts at prime time No complete control over viewership and their response. Red Bull Primarily helps to increase top of mind brand awareness amongst consumers. 20 March Seminar Strategic Marketing 7

8 PROMOTIONAL APPROACHES (3) Below-the-line (BTL) Promotions encompass all other forms of promotional activity Unconventional brand-building and promotional strategies such as direct mail, flyers, brochures, promotions, events, sponsoring, etc. Red Bull Reach targeted consumer group Heavy focus on developing inventive BTL promotions In a few cases traditional sponsorship Sports events around the world provide a platform for talented athletes to show their skills and ambition (i.e. Red Bull X-Fighters, Red Bull Air Race, etc.) Sponsoring and events help to establish the brand values 20 March Seminar Strategic Marketing 8

9 PROMOTIONAL APPROACHES (4) BTL effects Events support the brand ethos and contribute to the Red Bull experience Focus on local activities can have a big impact and create interesting media coverage An annual activity plan, based on a three-year overview of promotional work Advantage: Quick and inexpensive change is possible. Repetition and development of ideas that seem to have good public appeal. Achievement of mass awareness without big budgets (Exception Sponsorship: The Red Bull Formula 1 team, Football teams: New York Red Bulls, Red Bull Salzburg) Sponsorship = Cornerstone of the promotional strategy? Activities are focused on building talent and pushing the sport to new levels through innovation 20 March Seminar Strategic Marketing 9

10 PULL vs. PUSH MARKETING Push strategy Consumers receive corporate information, although they have no need for new products Is used to create awareness of the product Companies try to reduce information asymmetry through sales promotion, i.e. advertisements Latent need is converted into urgent need / demand through aggressive price politics, personal selling or junk mail Used for new products in existing markets and products in need of explanation Pull strategy Companies adapt strategically their offer to the demands of selected / targeted consumers Corporate image and brand awareness Pressure on the commerce through the demand commerce needs to offer products in their range Less marketing activities are necessary to force the sell of the goods Creation of a demand: Only big companies can afford a pull strategy by investing great amounts in branding 20 March Seminar Strategic Marketing 10

11 INNOVATION IN PROMOTION Word of mouth (WOM) promotion (based on pull marketing) Transmission of a positive marketing message from person to person Getting consumers excited about the product and conveying this excitement to their family and friends. Coverage of Red Bull events in the press can encourage consumers to find out more about the product and talk about it Innovative initiatives Red Bull Wings Team Student Brand Manager Program Red Bull Bedroom Jam Red Bull Reporter Digital and social media Constantly creating new ways of reaching its audiences online. Facebook, Twitter and online blogs easy for people to exchange information quickly Smart phone applications to promote campaigns Promotion techniques are easy to adapt and refine 20 March Seminar Strategic Marketing 11

12 EVALUATING PROMOTIONAL ACTIVITIES For promotions to remain effective, Red Bull has to analyze the impact of different campaigns Problem: Difficult to measure the effectiveness of Word-of-mouth (WOM) Although healthy sales are an important measure, Red Bull uses other measures to evaluate the effectiveness of its activities Amount of the editorial coverage of the activities received by media Number of blogs related to Red Bull products and the frequency of comment on these blogs Online influence of Red Bull activities in the social media such as Twitter ( follower) and Facebook ( > likes ) Annual brand health-check with consumers to ensure that they like the brand Country comparisons (example: Red Bull wings team) 20 March Seminar Strategic Marketing 12

13 CONCLUSION Red Bull adopts a progressive marketing strategy which is constantly evolving to push the brand forward. Allows to adapt its promotional activity to reflect technological and social changes (i.e. increasing use of smart phone apps as a communication channel) Social and digital media is the heart of all of its promotional campaigns. New innovative marketing techniques minimize the risk of noise Achievement: Consumer awareness, brand loyalty and brand value Increasing sales 20 March Seminar Strategic Marketing 13

14 PRACTICAL CASES (1) CASE 1 Apply the marketing mix to a new Apple product such as the iphone 5. Furthermore, explain how Red Bull applies and measures digital and social media. Mention an example for social media apart from facebook and twitter supporting Red Bull s marketing and explain your decision. CASE 2 Which communication strategy does Red Bull mainly use in order to communicate with its customers; the push or the pull strategy? Which are the advantages and disadvantages of both strategies? Why do you think Red Bull mainly bases its communication on one strategy? CASE 3 Please explain the difference between the below-the-line and the above-the-line approach. Which approach does Red Bull apply? How can the success of the marketing campaigns be measured in the long term? 20 March Seminar Strategic Marketing 14

15 Universidad de Córdoba Facultad de Ciencias y Empresariales (ETEA) CASE STUDY 3: CORPORATE COMMUNICATION / ADVERTISING (THE RED BULL EXAMPLE) Johannes Stolz (jstolz@uloyola.es) 20 March Seminar Strategic Marketing 15